Monday, May 3, 2010

Amazon Cuts Prices in Tiff With Penguin

In the latest round of the book pricing wars, Amazon.com Inc. has begun selling a number of new hardcover books published this month by Pearson PLC's Penguin Group (USA) for only $9.99 amid a dispute between the two companies over electronic books.

Penguin stopped providing digital editions of new titles to Amazon as of April 1 because Penguin and Amazon haven't yet struck an agreement on a new "agency" pricing model, in which publishers set the retail prices of their e-books. Out of the five major publishers that struck an agency-pricing deal with Apple Inc., Penguin is the only one that hasn't yet reached an agreement with Amazon.

Since Amazon can't sell the digital editions of Penguin's books, it is, in effect, showing its customers that Amazon is still the place to go for discount pricing. The low price also serves to put pressure on Penguin, as publishers passionately dislike the steep discounts. Many publishers say a $9.99 price tag on a new hardcover book cheapens the value in the minds of consumers.

Amazon and Penguin declined to comment.

The works being discounted aren't necessarily best-sellers, which Amazon has traditionally reserved the $9.99 price for. Rather, their low retail price underscores the increasingly competitive and complicated retail bookselling landscape now that Apple has launched its iPad tablet and Google Inc. is readying its own bookselling service, Google Editions. A host of additional new devices are expected to go on sale later this year.